Landed cost per unit is the supplier's unit price plus that unit's share of everything else it took to get the shipment to your door: freight, insurance, brokerage, and duty. When one shipment carries several products, the work is splitting the shared bills fairly. Freight splits by weight, duty follows each product's own rate, and the template below does both.
The margin calculator's FAQ covers what landed cost is. This page is the arithmetic for three SKUs, one freight invoice, and one customs entry, ending in a per-unit number for each that adds back up to what you paid.
The per-unit formula
Unit cost is the supplier's invoice price after discounts. Freight and fees is the shared pool: inbound freight, destination handling, delivery, cargo insurance, brokerage, and any flat customs fees. Duty is computed per product line, never pooled.
The test of a good allocation is that the per-unit landed costs, multiplied back by the quantities, sum to the supplier invoice plus every other bill. If they don't, a cost has gone missing, and it'll turn up later as margin you thought you had.
Three ways to split a shared bill
There are three honest ways to divide a shared cost across the products in a shipment. The right one depends on what drove the bill.
| Method | Each SKU's share | Right when | Misleads when |
|---|---|---|---|
| By weight | pool × (line weight ÷ shipment weight) | The carrier billed by weight or volume, as freight and handling are | A light, expensive item gets almost no freight and looks more profitable than it is |
| By value | pool × (line value ÷ shipment value) | The charge scaled with the goods' worth: insurance, or a percentage-of-value fee | Heavy, cheap goods rode with light, dear ones, so the dear ones pay for freight they didn't use |
| By unit | pool ÷ total units | Every unit is about the same size and price, or the fee was per piece | Anything mixed: a $4 mug and a $31 board carry the same freight, and the mug is badly overstated |
In practice: freight and handling by weight (or by volume, if that's how the forwarder billed), insurance by value, and duty on its own line. Most small importers get close enough by putting the whole pool through the weight method, which is what the example and the template do.
A worked example: one shipment, three SKUs
Northside Goods, the store in the margin calculator's sample catalog, brings in a consolidated ocean shipment with three of its products. The unit costs are the sample's; the quantities, weights, duty rates, and bills are stand-ins for yours.
- Heavyweight tee (TEE-HW-BLK)
- 600 units at $9.50, 0.30 kg each, 16% duty
- Enamel camp mug (MUG-ENM-12)
- 400 units at $4.20, 0.35 kg each, 10% duty
- Walnut cutting board (BRD-WAL-L)
- 100 units at $31.00, 2.0 kg each, 4% duty
- Merchandise value
- $5,700 + $1,680 + $3,100 = $10,480
- Shipment weight
- 180 + 140 + 200 = 520 kg
- Freight and fees pool
- $520 ocean freight + $310 destination handling and delivery + $175 brokerage + $35 insurance = $1,040
The duty rates are illustrative. Yours come from each product's tariff line on the entry your broker files, covered below.
The freight pool, three ways
By weight, the pool costs $1,040 ÷ 520 kg = $2.00 per kilogram. By value it's $1,040 ÷ $10,480 = 9.92 cents per dollar of goods. By unit it's $1,040 ÷ 1,100 = 95 cents a piece.
| SKU | By weight | By value | By unit |
|---|---|---|---|
| Heavyweight tee | 0.30 kg × $2.00 = $0.60 | $9.50 × 9.92% = $0.94 | $0.95 |
| Enamel camp mug | 0.35 kg × $2.00 = $0.70 | $4.20 × 9.92% = $0.42 | $0.95 |
| Walnut cutting board | 2.0 kg × $2.00 = $4.00 | $31.00 × 9.92% = $3.08 | $0.95 |
Read across the mug's row. The method alone moves its freight from $0.42 to $0.95, a 53-cent swing on a $4.20 item, about 13% of its cost. Freight was billed by weight, so weight is the right call, and the sample catalog's freight column was built exactly this way: $0.60, $0.70, and $4.00.
Duty follows the line, not the shipment
Duty is different. Each product has its own tariff classification and its own rate, so duty isn't a pool to split. Multiply each line's customs value by its rate, then divide by the units on that line.
- Heavyweight tee
- $5,700 × 16% = $912 ÷ 600 = $1.52 a unit
- Enamel camp mug
- $1,680 × 10% = $168 ÷ 400 = $0.42 a unit
- Walnut cutting board
- $3,100 × 4% = $124 ÷ 100 = $1.24 a unit
- Total duty on the entry
- $1,204
Spread that $1,204 by value instead, at a flat 11.5%, and the tee carries $1.09 instead of $1.52 while the board carries $3.56 instead of $1.24. If your broker's invoice shows one duty figure, ask for the entry summary; it lists duty by line.
Landed cost per unit
- Heavyweight tee
- $9.50 + $0.60 + $1.52 = $11.62
- Enamel camp mug
- $4.20 + $0.70 + $0.42 = $5.32
- Walnut cutting board
- $31.00 + $4.00 + $1.24 = $36.24
- Check
- 600 × $11.62 + 400 × $5.32 + 100 × $36.24 = $12,724, which is $10,480 + $1,040 + $1,204
The check line is the one to keep. Every allocation has to add back to the bills.
Where the duty rate comes from
In the US, duty rates come from the Harmonized Tariff Schedule, published by the US International Trade Commission. Customs and Border Protection's guidance on determining duty rates (updated November 2024) is blunt about who decides: CBP makes the final determination of the correct rate, not the importer. Use the rate on the entry your broker filed, and keep that document with the supplier invoice.
US customs law defines transaction value as the price actually paid or payable for the goods, excluding international transportation and insurance (19 U.S.C. § 1401a). That's why the example applies each rate to the supplier's price, not to price plus freight. Other countries may include freight and insurance in the dutiable value; if you import elsewhere, use your customs authority's basis, then divide duty per unit by unit cost to get the percentage the margin calculator expects.
Landed cost vs cost of goods sold
Landed cost is a per-unit number about what you bought. Cost of goods sold is a period number about what you sold: the landed cost of the units that went out the door this month. A shipment that lands in March is $12,724 of inventory in March and becomes COGS one unit at a time as it sells.
Freight and duty belong inside inventory, not in an expense line the month they're paid. The IRS says so directly: the cost of purchased merchandise is the invoice price, less discounts, plus transportation and other charges incurred in acquiring it (Publication 538, revised January 2022). Expensing the freight bill in March understates March and overstates the margin on every unit sold afterwards.
How to do yours
- Gather one shipment's paperwork: the supplier's invoice with quantities and unit prices by SKU, the packing list with weights, the forwarder's and broker's invoices, the insurance charge, and the entry summary showing duty by line.
- Add the shared costs into one pool: freight, destination handling and delivery, brokerage, insurance, and any flat customs fees. Leave duty out.
- For each SKU, write down quantity, unit cost, and unit weight, then compute line value and line weight. Total both columns.
- Allocate the pool by weight: pool × line weight ÷ shipment weight, then divide by the line's units for freight per unit. Use value only for a charge that scaled with value.
- Compute duty per unit from each line's customs value and rate, add the three numbers, and check that the line totals add back to every invoice. Put each SKU into the CSV template below, or start in the margin calculator and enter the three numbers per product.
The template is a shipment in one sheet. A header block holds the four shared cost lines and totals them, and one cell picks weight or value as the method. Each product row takes sku, name, quantity, unit cost, unit weight, and duty percent, then computes freight per unit both ways, duty per unit, landed cost per unit, and the line total, with a check row underneath. The column names match the margin calculator's fields.
Put it in the margin calculator
The calculator's landed cost is unit cost plus freight plus duty as a percent of cost. Enter the supplier's unit price in the cost field, your allocated freight and fees per unit in the freight field, and the rate in the duty field. Load the sample catalog and the tee, mug, and board already carry $0.60, $0.70, and $4.00 of freight from the allocation above. Type 16 into the tee's duty field and its margin drops from about 47% to about 42%.
Questions people ask
How do you allocate freight cost to multiple items in one shipment?
Add the freight, handling, brokerage, insurance, and flat fees into one pool, then give each product a share in proportion to its weight, or its volume if that's how the carrier billed. Divide each line's share by its units, and check that the per-unit figures times the quantities add back to the pool.
Should freight be allocated by weight or by value?
By whatever drove the bill. Freight and handling are priced by weight or volume, so allocate them that way; insurance and any percentage-of-value charge go by value. Allocating freight by value is the common mistake: it makes light, expensive items look cheaper to land than they are.
Is import duty calculated on the price of the goods or on the price plus freight?
In the US, on the price you paid the supplier. Federal law defines transaction value as the price actually paid or payable, excluding international freight and insurance, so each line's rate applies to its invoice value. Some other countries include freight and insurance, so check your customs authority's basis first.
What is the difference between landed cost and cost of goods sold?
Landed cost is what one unit cost you to buy and bring in; it's an inventory number. Cost of goods sold is the landed cost of the units you actually sold in a period; it's a profit-and-loss number. Freight and duty reach the P&L as units sell, not in the month you paid the bill.